Newspaper article The Journal (Newcastle, England)

All Eyes on Half-Year Results, Post-Brexit; FORECAST

Newspaper article The Journal (Newcastle, England)

All Eyes on Half-Year Results, Post-Brexit; FORECAST

Article excerpt

Byline: BEN WOODS AND HOLLY WILLIAMS business@ncjmedia.co.uk

BANKING giants will dominate the reporting this week, with the City looking out for any Brexit concerns when Barclays and Lloyds deliver their half-year results.

Barclays posts its half-year figures on Friday after a better-than-expected results season from its US counterparts, but Brexit will remain in focus.

The group will likely have to make big changes to adapt post Brexit, having sold off most of its European operations since the financial crisis.

Boss Jes Staley will be looked to for further details on its plans following the vote when he unveils interim results.

The figures come after deal-making and trading revenues have come under pressure in recent months, although US investment banks have put in a robust performance thanks to a second-quarter bounce back.

JP Morgan, Citi and Goldman Sachs are all among those who have surprised Wall Street with their results for the three months to the end of June.

Goldman Sachs posted a 74% surge in earnings to $1.82bn (PS1.4bn) for the second quarter, thanks largely to cost cutting and lower legal costs, but also soaring fixed income trading revenue.

This came after JP Morgan reported a 13% rise in trading revenue and 35% jump in fixed income trading revenues.

Barclays saw profits tumble by a quarter in the first three months of the year as it was hit by tough trading in its investment banking arm. The group posted first quarter pre-tax profits of PS793m, down from PS1.1bn a year earlier, as underlying profits in its corporate and investment banking business dropped 31%.

Ian Gordon, banking analyst at Investec, said Barclays is likely to benefit from the fixed income boost, but also the stronger dollar versus the pound, as it makes a hefty amount of investment banking revenues in dollars.

But he said revenues overall are likely to remain under pressure, with the retail bank's woes only set to worsen if interest rates are cut, as many expect.

"The second quarter is likely to be OK for Barclays, but the real issues are the negative impact of any interest rate cut and possible slowdown in loan growth," he said. …

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